DRAFT OF JANUARY 28, 1997
EXHIBIT 1.1
12,500,000 Shares
STERLING COMMERCE, INC.
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
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___________ __, 1997
Alex. Xxxxx & Sons Incorporated
Xxxxxxx, Sachs & Co.
As Representatives of the Several Underwriters
c/o Alex. Xxxxx & Sons Incorporated
0 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Gentlemen:
Sterling Commerce, Inc., a Delaware corporation (the "Company"), proposes
to sell to the several underwriters (the "Underwriters") named in Schedule I
hereto for whom you are acting as representatives (the "Representatives") an
aggregate of 12,500,000 shares (the "Firm Shares") of the Company's Common
Stock, $.01 par value (the "Common Stock"). The respective amounts of the Firm
Shares to be so purchased by the several Underwriters are set forth opposite
their names in Schedule I hereto. The Company also proposes to sell at the
Underwriters' option an aggregate of up to 1,875,000 additional shares of the
Common Stock (the "Option Shares") as set forth below.
As the Representatives, you have advised the Company (a) that you are
authorized to enter into this Agreement on behalf of the several Underwriters
and (b) that the several Underwriters are willing, acting severally and not
jointly, to purchase the numbers of Firm Shares set forth opposite their
respective names in Schedule I, plus their pro rata portion of the Option Shares
if you elect to exercise the over-allotment option in whole or in part for the
accounts of the several Underwriters. The Firm Shares and the Option Shares (to
the extent the aforementioned option is exercised) are herein collectively
called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. Representations and Warranties of the Company.
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(a) A registration statement on Form S-3 (File No. 333-________) with
respect to the Shares has been prepared by the Company in conformity in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") thereunder and has
been filed with the Commission. The Company is permitted to use Form S-3. Copies
of such registration statement, including any amendments thereto, the
preliminary prospectuses (prepared in conformity in all material respects with
the requirements of the Rules and Regulations) contained therein and the
exhibits, financial statements and schedules, as finally amended and revised,
have heretofore been delivered by the Company to you. Such registration
statement, as amended, including a registration statement (if any) filed
pursuant to Rule 462(b) under the Act increasing the size of the offering
registered under the Act (the "Registration Statement"), which shall be deemed
to include all information omitted therefrom in reliance upon Rule 430A and
contained in the Prospectus referred to below, has become effective under the
Act and no post-effective amendment to the Registration Statement has been filed
as of the date of this Agreement. "Prospectus" means (a) the form of prospectus
first filed with the Commission pursuant to Rule 424(b) or (b) the last
preliminary prospectus included in the Registration Statement filed prior to the
time it becomes effective or filed pursuant to Rule 424(a) under the Act that is
delivered by the Company to the Underwriters for delivery to purchasers of the
Shares, together with the term sheet or abbreviated term sheet filed with the
Commission pursuant to Rule 424(b)(7) under the Act. Each preliminary prospectus
included in the Registration Statement prior to the time it becomes effective is
herein referred to as a "Preliminary Prospectus." Any reference herein to the
Registration Statement, any Preliminary Prospectus or to the Prospectus shall be
deemed to refer to and include any documents incorporated by reference therein,
and, in the case of any reference herein to any Prospectus, also shall be deemed
to include any supplements or amendments thereto, filed with the Commission
after the date of first filing of the Prospectus under Rules 424(b) or 430A, and
prior to the termination of the offering of the Shares by the Underwriters.
(b) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. Each of the subsidiaries of
the Company as listed in Exhibit 1(b) hereto (collectively, the "Subsidiaries")
has been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, with corporate
power and authority to own or lease its properties and conduct its business as
described in the Registration Statement. The Subsidiaries are the only
subsidiaries (as defined in Rule 405 under the Act), direct or indirect, of the
Company. The Company and each of the Subsidiaries are duly qualified to transact
business in all jurisdictions in which the conduct of their business requires
such qualification, except where the failure to be so qualified would not, in
the aggregate, have a material adverse effect on the business, financial
condition, assets or results of operations of the Company and the Subsidiaries
taken as a whole (a "Material Adverse Effect"). The outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and non-assessable and are owned by the
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Company or another Subsidiary free and clear of all liens, mortgages, pledges,
charges, equities, claims or encumbrances of any kind (collectively, "Liens")
other than Liens that are disclosed in the Prospectus or that are not required
to be so disclosed; and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in the
Subsidiaries are outstanding.
(c) The outstanding shares of Common Stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable and no
preemptive rights of stockholders exist with respect to any of the Shares or the
issue and sale thereof. Neither the filing of the Registration Statement nor the
offering or sale of the Shares as contemplated by this Agreement gives rise to
any rights, other than those that have been waived or satisfied, for or relating
to the registration of any shares of Common Stock. Except as disclosed in the
Registration Statement, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to require the
Company to file a registration statement under the Act with respect to any
securities of the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to any
other registration statement filed by the Company under the Act.
(d) The Shares conform to the description thereof contained in the
Registration Statement. The form of certificate for the Shares conforms to the
corporate law of the jurisdiction of the Company's incorporation.
(e) The Commission has not issued an order preventing or suspending the
use of any Prospectus relating to the proposed offering of the Shares nor
instituted proceedings for that purpose. The Registration Statement contains,
and the Prospectus and any amendments or supplements thereto will contain, all
statements that are required to be stated therein by, and will conform in all
material respects to, the requirements of the Act and the Rules and Regulations.
The documents incorporated by reference in the Prospectus, at the time filed
with the Commission, conformed in all respects to the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder. None of the documents incorporated
by reference in the Prospectus, at the time filed with the Commission (or, if an
amendment with respect to any such document has been filed, when such amendment
was filed), contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; and no further document incorporated by reference in
the Prospectus filed with the Commission will, when filed, contain any untrue
statement of a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. No contract or document of a character required
to be described in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement is not so described or filed as
required. The Registration Statement does not contain, and no post-effective
amendment thereto will contain, any untrue statement of a material fact and the
Registration Statement does not omit, and no post-effective amendment thereto
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will omit, to state any material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus does not contain,
and no amendment or supplement thereto effected on or after the date hereof will
contain, any untrue statement of material fact, and the Prospectus does not
omit, and no amendment or supplement thereto effected on or after the date
hereof will omit, to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Notwithstanding the foregoing, the
Company makes no representations or warranties as to any information contained
in or omitted from the Registration Statement or the Prospectus, or any such
amendment or supplement, in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives, specifically for use in the preparation thereof.
(f) The consolidated financial statements of the Company and the
Subsidiaries (together with related notes and schedules) included or
incorporated by reference in the Registration Statement, present fairly, in all
material respects, the consolidated financial position, results of operations
and cash flows of the Company and the Subsidiaries at the indicated dates and
for the indicated periods. Such financial statements and related schedules have
been prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved. The summary financial and
operating data included or incorporated by reference in the Registration
Statement presents fairly the information shown therein and such data has been
compiled on a basis consistent with the financial statements of the Company
included therein.
(g) Ernst & Young LLP are independent public accountants as required by
the Act and the Rules and Regulations.
(h) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of the
Subsidiaries before any court or administrative agency or otherwise that if
determined adversely to the Company or any of the Subsidiaries would (a) have a
Material Adverse Effect or (b) prevent the consummation of the transactions
contemplated hereby.
(i) The Company and the Subsidiaries have good and marketable title to
all of the properties and assets reflected in the financial statements (or
disclosed in the Registration Statement) hereinabove described, free and clear
of all Liens except Liens reflected in such financial statements (or disclosed
in the Registration Statement) and Liens that are not required to be so
reflected (or disclosed). All material leases to which the Company or any
Subsidiary is a party are valid and binding, and no defaults have occurred or
are continuing under such leases that are having or would have a Material
Adverse Effect. The Company and/or one or more of the Subsidiaries enjoys
peaceful and undisturbed possession under each such lease with such exceptions
as, in the aggregate, do not materially interfere with the use made thereof by
the Company and/or one or more of the Subsidiaries.
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(j) This Agreement has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement of the Company, enforceable in
accordance with its terms, except as to rights to indemnity and contribution
hereunder which may be limited by federal and state securities laws and subject
to bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and
other laws of general applicability relating to or affecting creditors' rights,
general equitable principles and public policy considerations.
(k) The Company and the Subsidiaries have filed or have had filed on
their behalf all Federal, state, local and foreign income tax returns that have
been required to be filed and have paid or had paid on their behalf all taxes
indicated by such returns and all assessments received by them or any of them to
the extent that such taxes and assessments have become due and are not being
contested in good faith.
(l) Except for changes, developments and transactions contemplated in the
Registration Statement, since the respective dates as of which information is
given in the Registration Statement, (a) there has not occurred any event having
a Material Adverse Effect or any development involving a prospective Material
Adverse Effect, whether or not occurring in the ordinary course of business, and
(b) there has not been any material transaction entered into or any material
transaction that is probable of being entered into by the Company or the
Subsidiaries, other than transactions in the ordinary course of business.
(m) Neither the Company nor any of the Subsidiaries is, or with the
giving of notice or lapse of time or both will be, in violation of or in default
under its charter or bylaws or under any agreement, lease, contract, indenture
or other instrument or obligation to which it is a party or by which it, or any
of its properties, is bound, except for any such violations or defaults that, in
the aggregate, would not have a Material Adverse Effect. The execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, any agreement, lease, contract, indenture or other instrument or
obligation to which the Company or any Subsidiary is a party, or of the charter
or bylaws of the Company or any Subsidiary or any order, rule or regulation
applicable to the Company or any Subsidiary of any court, regulatory,
administrative or other governmental body having jurisdiction except in any such
case for conflicts, breaches or defaults that, in the aggregate, would not have
a Material Adverse Effect.
(n) Each approval, consent, order, authorization, designation,
declaration or filing (collectively, "Consents") by or with any regulatory,
administrative or other governmental body required in connection with the
consummation of the execution and delivery by the Company of this Agreement and
the consummation by the Company of the transactions herein contemplated (except
such additional actions as may be required under the Act and the Rules and
Regulations, the Exchange Act and the rules and regulations thereunder or the
bylaws of the National Association of Securities Dealers, Inc. (the "NASD") or
such additional actions as may be necessary to qualify the Shares for public
offering by the Underwriters under state or foreign securities or Blue Sky laws)
has been obtained or made and is in full force and effect except where the
failure to obtain or make any
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such Consent, or the failure of any such Consent to be in full force and effect,
would not have, in the aggregate, a Material Adverse Effect.
(o) The Company and the Subsidiaries are operating in compliance with all
statutes, laws, regulations, ordinances or court decrees applicable to their
respective businesses and operations, except where such non-compliance would
not, in the aggregate, have a Material Adverse Effect. Neither the Company nor
any Subsidiary has violated any foreign, Federal, state or local law or
regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), or relating to discrimination in the
hiring, promotion or pay of, or to the wages and hours of, employees, except for
such violations as in the aggregate would not have a Material Adverse Effect.
(p) The Company and the Subsidiaries possess or have the right to use all
licenses, patents, patent rights, patent applications, inventions, trade
secrets, know-how, proprietary information and techniques, processes,
trademarks, service marks, trade names, computer software and copyrights
described or referred to in the Registration Statement as being owned or used by
them or that are necessary for the conduct of their business as described in the
Registration Statement, except to the extent that the failure to possess or to
have the right to use any such items, in the aggregate, would not have a
Material Adverse Effect. Any registrations covering such patents, trademarks,
service marks, trade names or copyrights owned by the Company or the
Subsidiaries are valid and subsisting, have not been canceled, abandoned or
otherwise terminated and, if applicable, have been duly issued or filed, except
where the failure of such registrations to be valid and subsisting or the
cancellation, abandonment or other termination of such registrations or the
failure to receive such issuances or make such filings, in the aggregate, would
not have a Material Adverse Effect. Neither the Company nor any Subsidiary is
aware of or has received any notice of infringement of, or conflict or claimed
conflict with, asserted rights of others with respect to any licenses, patents,
patent rights, patent applications, inventions, trade secrets, know-how,
proprietary information or techniques, including processes, trademarks, service
marks, trade names, computer software or copyrights, except where such
infringements or conflicts, in the aggregate, would not have a Material Adverse
Effect. The Company knows of no infringement by others of licenses, patents,
patent rights, patent applications, inventions, trade secrets, know-how,
proprietary information or techniques, including processes, trademarks, service
marks, trade names, computer software or copyrights owned by or licensed to the
Company, except where such infringements, in the aggregate, would not have a
Material Adverse Effect.
(q) Neither the Company nor, to the Company's knowledge, any of its
affiliates, has taken, directly or indirectly, any action designed to cause or
result in, or that has constituted or that might reasonably be expected to
constitute, the stabilization or manipulation of the price of the shares of
Common Stock to facilitate the sale or resale of the Shares.
(r) Neither the Company nor any Subsidiary is an "investment company" or
a company "controlled" by an "investment company" within the meaning of such
terms under the Investment
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Company Act of 1940, as amended ("Investment Company Act"), and the rules and
regulations of the Commission thereunder.
(s) The Company and each of the Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the conduct
of their respective businesses and the value of their respective properties and
as is customary for companies engaged in similar businesses.
(t) Except to the extent that any of the following matters, in the
aggregate, would not have a Material Adverse Effect: (i) the Company and the
Subsidiaries are in compliance with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); (ii) no
"reportable event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company or any Subsidiary
would have any liability; (iii) neither the Company nor any Subsidiary has
incurred or expects to incur liability under (1) Title IV of ERISA with respect
to termination of, or withdrawal from, any "pension plan" or (2) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and (iv) each "pension
plan" for which the Company or any Subsidiary would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified and
nothing has occurred, whether by action or by failure to act, that would cause
the loss of such qualification.
(u) The Company confirms as of the date hereof that it is in compliance
with all provisions of Section 1 of Laws of Florida, Chapter 92-198, An Act
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Relating to Disclosure of Doing Business with Cuba, and the Company further
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agrees that if it commences engaging in business with the government of Cuba or
with any person or affiliate located in Cuba after the date the Registration
Statement becomes or has become effective with the Commission or with the
Florida Department of Banking and Finance (the "Department"), whichever date is
later, or if the information reported or incorporated by reference in the
Prospectus, if any, concerning the Company's business with Cuba or with any
person or affiliate located in Cuba changes in any material way, the Company
will provide the Department notice of such business or change, as appropriate,
in a form acceptable to the Department.
(v) To the knowledge of the Company, there are no affiliations between or
among the Company's officers, directors or 5% stockholders or any affiliates
thereof and the NASD or any member or affiliate of any member of the NASD,
except as set forth in the Prospectus or as otherwise disclosed to the
Representatives.
2. Purchase, Sale and Delivery of the Firm Shares.
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(a) On the basis of the representations, warranties and covenants herein
contained, and subject to the conditions herein set forth, the Company agrees to
sell to the Underwriters and each Underwriter agrees, severally and not jointly,
to purchase, at a price of $____ per share, the number
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of Firm Shares set forth opposite the name of each Underwriter in Schedule I
hereof, subject to adjustments in accordance with Section 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be made in
Federal (same-day) funds by wire transfer to an account designated by the
Company for such purpose against delivery of certificates therefor to the
Representatives for the several accounts of the Underwriters. Such payment and
delivery are to be made at the offices of Alex. Xxxxx & Sons Incorporated,
0 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx, at 10:00 a.m., Baltimore time, on
the third business day after the date of this Agreement or at such other time
and date not later than five business days thereafter as you and the Company may
agree unless otherwise permitted by the Commission pursuant to Rule 15c6-1 of
the Exchange Act (such time and date being herein referred to as the "Closing
Date"). (As used herein, "business day" means a day on which the New York Stock
Exchange is open for trading and on which banks in New York are open for
business and are not permitted by law or executive order to be closed.) The
certificates for the Firm Shares will be delivered in such denominations and in
such registrations as the Representatives request in writing not later than the
second full business day prior to the Closing Date, and will be made available
for inspection by the Representatives at least one business day prior to the
Closing Date.
(c) In addition, on the basis of the representations, warranties and
covenants herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase the Option Shares at the price per share as set forth in the first
paragraph of this Section 2. The option granted hereby may be exercised in whole
or in part, but only once, by giving written notice within 30 days after the
date of this Agreement, by you, as Representatives of the several Underwriters,
to the Company setting forth the number of Option Shares as to which the several
Underwriters are exercising the option, the names and denominations in which the
Option Shares are to be registered and the time and date at which such
certificates are to be delivered. The time and date at which certificates for
Option Shares are to be delivered shall be determined by the Representatives but
shall not be earlier than three nor later than ten full business days after the
exercise of such option, nor in any event prior to the Closing Date (such time
and date being herein referred to as the "Option Closing Date"). If the date of
exercise of the option is three or more days before the Closing Date, the notice
of exercise shall set the Closing Date as the Option Closing Date. The number of
Option Shares to be purchased by each Underwriter shall be in the same
proportion to the total number of Option Shares being purchased as the number of
Firm Shares being purchased by such Underwriter bears to the total number of
Firm Shares being purchased, adjusted by you in such manner as to avoid
fractional shares. The option with respect to the Option Shares granted
hereunder may be exercised only to cover over-allotments in the sale of the Firm
Shares by the Underwriters. You, as Representatives of the several Underwriters,
may cancel such option at any time prior to its expiration by giving written
notice of such cancellation to the Company. To the extent, if any, that the
option is exercised, payment for the Option Shares shall be made on the Option
Closing Date in Federal (same-day) funds by wire transfer to an account
designated by the Company for such purpose against delivery of certificates
therefor at the offices of Alex. Xxxxx & Sons Incorporated, 0 Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx. The certificates for the Option Shares will be delivered in
such denominations and in such registrations
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as the Representatives request in writing not later than the second full
business day prior to an Option Closing Date, and will be made available for
inspection by the Representatives at least one business day prior to such Option
Closing Date.
3. Offering by the Underwriters.
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It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be initially offered to the public upon the terms
set forth in the Prospectus. The Representatives may from time to time
thereafter change the public offering price and other selling terms. To the
extent, if at all, that any Option Shares are purchased pursuant to Section 2
hereof, the Underwriters will offer them to the public on the foregoing terms.
It is further understood that you will act as the Representatives for the
Underwriters in the offering and sale of the Firm Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. Covenants of the Company.
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(a) The Company will (i) use its best efforts to cause the Registration
Statement to become effective at the earliest possible time or, if the procedure
in Rule 430A of the Rules and Regulations is followed, to prepare and timely
file with the Commission under Rule 424(b) of the Rules and Regulations a
Prospectus in a form approved by the Representatives containing information
previously omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A of the Rules and Regulations, (ii) not file any amendment
to the Registration Statement or supplement to the Prospectus or document
incorporated by reference therein of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or that is not in
compliance in all material respects with the Rules and Regulations and (iii)
file on a timely basis all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission subsequent to
the date of the Prospectus and prior to the termination of the offering of the
Shares by the Underwriters.
(b) The Company will advise the Representatives promptly and, if
requested by you, to confirm such advice in writing, (i) when the Registration
Statement or any post-effective amendment to the Registration Statement shall
have become effective, (ii) of receipt of any comments to the Registration
Statement or any post-effective amendment thereto from the Commission, (iii) of
any request of the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, the use of the Prospectus or of the suspension of
qualification of the Shares for offering or sale in any jurisdiction, or of the
institution of any proceedings for that purpose and (v) of the happening of any
event during the period referred to in Section 4(d) below which makes any
statement of a material fact made in the Registration Statement or the
Prospectus untrue or which requires the making of any additions to or changes in
the Registration Statement or the Prospectus in order to make the statements
therein not misleading.
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The Company will use its reasonable best efforts to prevent the issuance of any
such stop order preventing or suspending the use of the Prospectus and to obtain
as soon as possible the lifting thereof, if issued.
(c) The Company will cooperate with the Representatives in endeavoring to
qualify the Shares for sale under the securities laws of such jurisdictions as
the Representatives may reasonably have designated in writing and will make such
applications, file such documents and furnish such information as may be
reasonably required for that purpose, provided the Company shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction or take any action that would subject it to general
taxation in any jurisdiction. The Company will, from time to time, prepare and
file such statements, reports and other documents, as are or may be required to
continue such qualifications in effect for so long a period as the
Representatives may reasonably request for distribution of the Shares.
(d) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or before
the Closing Date, two copies of the Registration Statement and all amendments
thereto including all exhibits filed therewith, and will deliver to the
Representatives such number of copies of the Registration Statement (including
such number of copies of the exhibits filed therewith that may reasonably be
requested), including documents incorporated by reference therein, and of all
amendments thereto, as the Representatives may reasonably request.
(e) The Company will comply with the Act, the Rules and Regulations, the
Exchange Act and the rules and regulations of the Commission thereunder, in
connection with the completion of the distribution of the Shares contemplated by
this Agreement and the Prospectus. If during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer any event shall
occur as a result of which, in the judgment of the Company or in the reasonable
opinion of the Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading, or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will either (i) prepare
and file with the Commission an appropriate amendment to the Registration
Statement or supplement to the Prospectus or (ii) prepare and file with the
Commission an appropriate filing under the Exchange Act which shall be
incorporated by reference in the Prospectus so that the Prospectus as so amended
or supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with the law.
(f) The Company will make generally available to its security holders, as
soon as it is practicable to do so, but in any event not later than 15 months
after the effective date of the Registration Statement, an earnings statement
(that need not be audited) in reasonable detail,
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covering a period of at least 12 consecutive months beginning after the
effective date of the Registration Statement, which earning statement shall
comply with the requirements of Section 11(a) of the Act and the Rules and
Regulations (including, at the option of the Company, Rule 158, in which case
this Section 4(f) shall not be construed to require the Company to file any
report referred to in Rule 158 prior to the time at which such report is
otherwise due) and will advise you in writing when such statement has been so
made available.
(g) The Company will, for a period of five years from the Closing Date,
deliver to the Representatives copies of annual reports and all other documents,
reports and information furnished by the Company to its stockholders generally
or filed with any securities exchange pursuant to the requirements of such
exchange or with the Commission pursuant to the Act or the Exchange Act that
relate to the Common Stock of the Company. The Company, for such period, also
will deliver to the Representatives similar reports with respect to significant
subsidiaries, as that term is defined in the Rules and Regulations, that are not
consolidated in the Company's financial statements.
(h) The Company hereby agrees not to offer, sell, sell short, grant any
option to purchase or otherwise dispose of any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock or
otherwise derivative of Common Stock for a period of 90 days after the date of
this Agreement, directly or indirectly, otherwise than hereunder, under the
Company's 1996 Stock Option Plan or with the prior written consent of Alex.
Xxxxx & Sons Incorporated.
(i) The Company will use its reasonable best efforts to list, subject to
notice of issuance, the Shares on the New York Stock Exchange.
(j) The Company has caused each executive officer and director of the
Company identified in Exhibit 4(i) hereto to furnish to you, on or prior to the
date of this Agreement, a letter or letters, in form and substance satisfactory
to the Underwriters, pursuant to which each such person shall agree not to
offer, sell, sell short, grant any option to purchase or otherwise dispose of
any shares of Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock or otherwise derivative of Common Stock (or
agreement for such) owned by such person (or as to which such person has the
right to direct the disposition of) for a period of 90 days after the date of
this Agreement, directly or indirectly, except for transfers by gift or
otherwise without consideration or with the prior written consent of Alex. Xxxxx
& Sons Incorporated (the "Lockup Agreements") [; provided, further, that upon
any such transfer by gift, the transfer thereof shall be bound by the terms and
provisions of such Lockup Agreement]. The Representatives, on behalf of
themselves and the other Underwriters, acknowledge and agree that the provisions
of Lockup Agreements shall not apply to any transaction involving Common Stock
or any other security to which such director or executive officer disclaims
beneficial ownership (as that term is used in Rule 13d-3 of the Rules and
Regulations).
(k) The Company shall apply the net proceeds of its sale of the Shares as
set forth in the Prospectus.
11
(l) The Company shall not invest or otherwise use the proceeds received
by the Company from its sale of the Shares in such a manner as would require the
Company or any of the Subsidiaries to register as an investment company under
the Investment Company Act.
(m) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar for the Common
Stock.
(n) Until the completion of the offering of the Shares contemplated
hereby, the Company will not take, directly or indirectly, any action designed
to cause or result in, or that might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Common Stock.
5. Costs and Expenses.
------------------
The Company will pay all costs, expenses and fees incident to the
performance of its obligations under this Agreement, including, without limiting
the generality of the foregoing, the following: accounting fees of the Company;
the fees and disbursements of counsel for the Company; the cost of printing or
otherwise reproducing and delivering to the Underwriters copies of the
Registration Statement, Preliminary Prospectuses, the Prospectus, this
Agreement, the Underwriters' Selling Memorandum, the Underwriters' Invitation
Letter, the Listing Application, the Blue Sky Survey and any supplements or
amendments thereto; the filing fees of the Commission; the filing fees and
expenses (including reasonable legal fees and disbursements) incident to
securing any required review by the NASD of the terms of the sale of the Shares;
the listing fee of the New York Stock Exchange; and the expenses, including the
reasonable fees and disbursements of counsel for the Underwriters (not to exceed
$2,000 in the aggregate), incurred in connection with the qualification of the
Shares under state securities or Blue Sky laws. The Company shall not, however,
be required to pay for any of the Underwriters' expenses (other than those
related to qualification under NASD regulations and state securities or Blue Sky
laws) except that, if this Agreement shall not be consummated because the
conditions in Section 6 hereof are not satisfied, or because this Agreement is
terminated by the Representatives pursuant to Section 11 hereof, or by reason of
any failure, refusal or inability on the part of the Company to perform any
undertaking or satisfy any condition of this Agreement or to comply with any of
the terms hereof on its part to be performed, unless such failure to satisfy
said condition or to comply with said terms be due to the default or omission of
any Underwriter, then the Company shall reimburse the several Underwriters for
reasonable out-of-pocket expenses, including reasonable fees and disbursements
of counsel, reasonably incurred in connection with investigating, marketing and
proposing to market the Shares or in contemplation of performing their
obligations hereunder; but the Company shall not in any event be liable to any
of the several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the Shares.
6. Conditions of the Obligations of the Underwriters.
-------------------------------------------------
The several obligations of the Underwriters to purchase the Firm Shares on
the Closing Date and the Option Shares, if any, on an Option Closing Date are
subject to the accuracy, as of the
12
Closing Date or the Option Closing Date, as the case may be, of the
representations and warranties of the Company contained herein, and to the
performance in all material respects by the Company of its covenants and
obligations hereunder and to the following additional conditions:
(a) The Registration Statement and any post-effective amendment thereto
shall have become effective and any and all filings required by Rule 424 and
Rule 430A of the Rules and Regulations shall have been made, and any request of
the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company, shall be contemplated by the Commission and no
injunction, restraining order or order of any nature by a Federal or state court
of competent jurisdiction shall have been issued that would prevent the issuance
of the Shares.
(b) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Xxxxx, Day, Xxxxxx &
Xxxxx, counsel for the Company, dated the Closing Date or the Option Closing
Date, as the case may be, addressed to the Underwriters to the effect that:
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own or lease its properties and
conduct its business as described in the Prospectus; each of the
Subsidiaries that has been created or organized in or under the laws of the
United States has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own or lease its
properties and conduct its business as described in the Prospectus, if so
described.
(ii) The Company has an authorized capitalization as set forth in
the Prospectus. [The issued and outstanding shares of Common Stock have
been duly authorized and validly issued and are fully paid and non-
assessable. ] The Shares conform to the description thereof contained in
the Prospectus. The certificates evidencing the Common Stock comply in all
material respects with the requirements of the General Corporation Law of
the State of Delaware. The Shares, including the Option Shares, if any, to
be sold by the Company pursuant to this Agreement have been duly authorized
and, when issued and paid for as contemplated by this Agreement, will be
validly issued, fully paid and non-assessable. Except as disclosed in the
Prospectus, there are no preemptive rights of stockholders under the
Company's Third Amended and Restated Certificate of Incorporation or
Amended and Restated Bylaws or any other instrument filed as an exhibit to
(1) the Registration Statement or (2) any report incorporated by reference
in the Prospectus filed prior to the date of such opinion.
13
(iii) To the knowledge of such counsel, the Registration Statement
became effective under the Act as of the date specified in the opinion and
no stop order proceedings with respect thereto have been instituted or are
pending or threatened by the Commission.
(iv) The Registration Statement (on the date it was declared
effective) and each report incorporated by reference therein and filed
prior to the date of such opinion (as of the date such report was filed
with the Commission) complied as to form in all material respects with the
requirements of the Act or the Exchange Act, as applicable, and the
applicable rules and regulations (except that such counsel need express no
opinion as to the operating statistics, the financial statements, related
schedules and other statistical and financial data included or incorporated
by reference therein and except for the information referred to under the
caption "Experts" as having been included in the Prospectus on the
authority of Ernst & Young LLP as experts).
(v) The statements under the caption "Description of Capital
Stock" in the Prospectus, insofar as such statements purport to summarize
the provisions of documents referred to therein, present fair summaries of
such provisions and, insofar as they purport to describe matters of law,
are accurate in all material respects.
(vi) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or to any
report incorporated by reference in the Prospectus filed prior to the date
of such opinion or required to be described in the Prospectus that are not
so filed or described as required, and statements contained in the
Prospectus, insofar as they purport to summarize the provisions of such
contracts and documents, present fair summaries of such provisions.
(vii) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under, the charter or bylaws of the Company or any
of the Subsidiaries (other than those incorporated in jurisdictions outside
the United States), or any agreement or instrument filed as an exhibit to
(1) the Registration Statement, or (2) any report incorporated by reference
in the Prospectus prior to the date of such opinion.
(viii) This Agreement has been duly authorized, executed and
delivered by the Company.
(ix) No Consent by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and
delivery of this Agreement by the Company and the consummation of the
transactions herein contemplated by the Company (other than as may be
required under the Act and the Rules and Regulations, the Exchange Act and
the rules and regulations thereunder, the bylaws of the NASD, state
securities and
14
Blue Sky laws or foreign laws or under any contract to which any
governmental entity is a party, as to which such counsel need express no
opinion) except such as have been obtained or made.
(x) The Company is not, and will not become, solely as a result of
the consummation of the transactions contemplated by this Agreement and
application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the Investment Company
Act.
Such counsel shall also have furnished to the Representatives a written
statement, dated the Closing Date or the Option Closing Date, as the case may
be, addressed to the Underwriters, to the effect that (i) such counsel has
participated in the preparation of the Registration Statement and (ii) based
upon such participation, no facts have come to the attention of such counsel
which lead it to believe that the Registration Statement (other than the
operating statistics, financial statements, related schedules and other
statistical and financial data included therein, as to which such counsel need
express no view), as of the time it became effective under the Act, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or that the Prospectus (other than the operating
statistics, financial statements, related schedules and other statistical and
financial data included therein, as to which such counsel need express no view),
as of the date of such written statement, contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The foregoing opinion
and statement may be qualified by a statement to the effect that such counsel
has not independently verified the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (including
any report or other document incorporated or deemed to be incorporated by
reference therein).
(c) The Representatives shall have received from Xxxxxx & Xxxxxx L.L.P.,
counsel for the Underwriters, an opinion dated the Closing Date or the Option
Closing Date, as the case may be, substantially to the effect specified in
subparagraphs (ii), (iii) and (vii) of Section 6(b). In addition to the matters
set forth above, such opinion shall also include a statement to the effect that
nothing has come to the attention of such counsel that leads them to believe
that (i) the Registration Statement, or any amendment thereto, as of the time it
became effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) and as of the Closing
Date or the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(ii) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the Option
Closing Date, as the case may be, contains or contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements contained therein, in the light of the circumstances under which they
are made, not misleading (except that such counsel need express no view as to
operating statistics, financial statements, related schedules and other
statistical and
15
financial information contained therein). The foregoing opinion and statement
may be qualified by a statement to the effect that such counsel has not
independently verified the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus.
(d) The Representatives shall have received at or prior to the Closing
Date from Xxxxxx & Xxxxxx L.L.P. a memorandum or summary, in form and substance
satisfactory to the Representatives, with respect to the qualification for
offering and sale by the Underwriters of the Shares under the state securities
or Blue Sky laws of such jurisdictions as the Representatives may reasonably
have designated to the Company.
(e) The Representatives shall have received, on each of the date hereof,
the Closing Date and the Option Closing Date, as the case may be, a letter dated
the date hereof, the Closing Date or the Option Closing Date, as the case may
be, in form and substance reasonably satisfactory to the Representatives, of
Ernst & Young LLP confirming that they are independent public accountants within
the meaning of the Act and the applicable published Rules and Regulations
thereunder and stating that in their opinion the financial statements and
schedules examined by them and included in the Registration Statement comply in
form in all material respects with the applicable accounting requirements of the
Act and the related published Rules and Regulations, and containing such other
statements and information as is ordinarily included in accountants' "comfort
letters" to Underwriters with respect to the financial statements and certain
financial and statistical information contained in the Registration Statement
and Prospectus.
(f) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates signed by
the Chief Executive Officer and the Chief Financial Officer of the Company to
the effect that, as of the Closing Date or the Option Closing Date, as the case
may be, each of them represents on behalf of the Company as follows:
(i) The Registration Statement has become effective under the Act,
no stop order suspending the effectiveness of the Registration Statement
has been issued, and, to such officer's knowledge, no proceedings for such
purpose have been taken or are contemplated by the Commission;
(ii) The representations and warranties of the Company contained in
Section 1(a) hereof are true and correct as of the Closing Date or the
Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to Rules 424
or 430A under the Act have been made;
(iv) Such officer has examined the Registration Statement and the
Prospectus and, to such officer's knowledge, (1) as of the effective date
of the Registration Statement, the Registration Statement and Prospectus
did not include any untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary in order
to
16
make the statements therein not misleading, and (2) since the effective
date of the Registration Statement, no event has occurred that should have
been set forth in a supplement to or an amendment of the Prospectus that
has not been so set forth in such a supplement or amendment;
(v) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, there has not occurred any event
having a Material Adverse Effect or any development involving a prospective
Material Adverse Effect, whether or not arising in the ordinary course of
business; and
(vi) The Company has, at or prior to the Closing Date, performed or
complied with all of the agreements herein contained and required to be
performed or complied with by the Company at or prior to the Closing Date.
(g) The Company shall have furnished to the Representatives such further
certificates and documents confirming the representations and warranties,
covenants and conditions contained herein and related matters as the
Representatives may reasonably have requested.
(h) The Shares shall have been approved for listing upon official notice
of issuance on the New York Stock Exchange.
(i) The Lockup Agreements described in Section 4(j) shall have been
executed and delivered to the Representatives.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are reasonably
satisfactory to the Representatives and to Xxxxxx & Xxxxxx L.L.P., counsel for
the Underwriters.
If any of the conditions hereinabove provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement, the obligations
of the Underwriters hereunder may be terminated by the Representatives by
notifying the Company of such termination in writing or by telegram at or prior
to the Closing Date or the Option Closing Date, as the case may be.
In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. Conditions of the Obligations of the Company.
--------------------------------------------
The obligations of the Company to sell and deliver the portion of the
Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing Date,
as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
17
8. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any losses,
claims, damages or liabilities to which such Underwriter or any such controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto or
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
and will reimburse each Underwriter and each such controlling person upon demand
for any legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any such loss,
claim, damage or liability, action or proceeding or in responding to a subpoena
or governmental inquiry related to the offering of the Shares, whether or not
such Underwriter or controlling person is a party to any action or proceeding;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage, liability, action or proceeding arises
out of or is based upon (i) an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by or through
the Representatives specifically for use in the preparation thereof or (ii) any
untrue statement or omission or alleged untrue statement or omission in a
Preliminary Prospectus if the Prospectus (or the Prospectus as amended and
supplemented) corrects the untrue statement or omission or the alleged untrue
statement or omission which is the basis of the loss, claim, damage, liability,
action or proceeding for which indemnification is sought and a copy of the
Prospectus (or the Prospectus as amended and supplemented) was not sent or given
to any person who received a Preliminary Prospectus, at or before the
confirmation of the sale to any person, in any case where such delivery is
required by the Act. The Company and the Underwriters acknowledge and agree that
the only information furnished by the Representatives to the Company for
inclusion in the Registration Statement or the Prospectus consists of the
information set forth in the last paragraph on the front cover page of the
Prospectus (insofar as such information relates to the Underwriters), the legend
that appears as the first paragraph on page 2 of the Prospectus and the
information under the caption "Underwriting" in the Prospectus. This indemnity
agreement will be in addition to any liability that the Company may otherwise
have.
(b) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
against any losses, claims, damages or liabilities to which the Company or any
such director, officer or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
18
amendment or supplement thereto or (ii) the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances under
which they were made, and will reimburse the Company, each such director,
officer or controlling person upon demand for any legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability, action or proceeding or in responding to a subpoena or
governmental inquiry related to the offering of the Shares, whether or not the
Company or such director, officer or controlling person is a party to any action
or proceeding; provided, however, that each Underwriter will be liable in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability that such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 8, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
8(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Section 8(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability that it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 8(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably acceptable to such indemnified
party and shall pay as incurred the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel at its own expense. Notwithstanding the
foregoing, the indemnifying party shall pay as incurred (or within 30 days of
presentation) the reasonable fees and expenses of the counsel retained by the
indemnified party in the event (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel, (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them or (iii) the indemnifying party shall have
failed to assume the defense and employ counsel reasonably acceptable to the
indemnified party within a reasonable period of time after notice of
commencement of the action. It is understood that the indemnifying party shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate law firm for all such indemnified parties. Such firm shall be
designated in writing by the Representatives in the case of
19
parties indemnified pursuant to Section 8(a) and by the Company in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party will indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment. In
addition, the indemnifying party will not, without the prior written consent of
the indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under Section 8(a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law then each indemnifying party shall contribute to such amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Underwriters on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to above in this Section 8(d). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 8(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions
20
of this Section 8(d), (i) no Underwriter shall be required to contribute any
amount in excess of the underwriting discounts and commissions applicable to the
Shares purchased by such Underwriter and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 8(d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter (or any person controlling
any Underwriter) or the Company (or their directors or officers) or any persons
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder and (iii) any termination of this Agreement. A successor to any
Underwriter, to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 8.
9. Default by Underwriters.
-----------------------
If on the Closing Date or the Option Closing Date, as the case may be, any
Underwriter shall fail to purchase and pay for the portion of the Firm Shares or
Option Shares, as the case may be, that such Underwriter has agreed hereunder to
purchase and pay for on such date (otherwise than by reason of any default on
the part of the Company), you, as Representatives of the Underwriters, shall use
your reasonable best efforts to procure within 24 hours thereafter one or more
of the other Underwriters, or any others, to purchase from the Company such
amounts as may be agreed and upon the terms set forth herein, the Firm Shares or
Option Shares, as the case may be, that the defaulting Underwriter or
Underwriters failed to purchase. If during such 24 hours you, as such
Representatives, shall not have procured such other Underwriters, or any others,
to purchase the Firm Shares or Option Shares, as the case may be, agreed to be
purchased by the defaulting Underwriter or Underwriters, then (a) if the
aggregate number of shares with respect to which such default shall occur does
not exceed 10% of the Firm Shares or Option Shares, as the case may be, covered
hereby, the other Underwriters shall be obligated, severally, in proportion to
the respective numbers of Firm Shares or Option Shares, as the case may be, that
they are obligated to purchase hereunder, to
21
purchase the Firm Shares or Option Shares, as the case may be, that such
defaulting Underwriter or Underwriters failed to purchase or (b) if the
aggregate number of Firm Shares or Option Shares, as the case may be, with
respect to which such default shall occur exceeds 10% of the Firm Shares or
Option Shares, as the case may be, covered hereby, the Company or you as the
Representatives of the Underwriters will have the right, by written notice given
within the next 24-hour period to the parties to this Agreement, to terminate
this Agreement without liability on the part of the non-defaulting Underwriters
or of the Company except to the extent provided in Section 8 hereof. In the
event of a default by any Underwriter or Underwriters, as set forth in this
Section 9, the Closing Date or the Option Closing Date, as the case may be, may
be postponed for such period, not exceeding seven days, as you, as
Representatives, may determine in order that the required changes in the
Registration Statement or in the Prospectus or in any other documents or
arrangements may be effected. The term "Underwriter" includes any person
substituted for a defaulting Underwriter. Any action taken under this Section 9
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
10. Notices.
-------
All communications hereunder will be in writing and, except as otherwise
provided herein, will be mailed, delivered, telecopied or telegraphed and
confirmed as follows: if to the Underwriters, to Alex. Xxxxx & Sons
Incorporated, 0 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxxxx X.
Xxxxxxxxx, with a copy to Alex. Xxxxx & Sons Incorporated, 0 Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000, Attention: General Counsel; if to the Company, to
Sterling Commerce, Inc., 0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx
00000 prior to February 24, 1997 and thereafter at 000 Xxxxxxxx Xxxxx, Xxxxx
0000, Xxxxxx, Xxxxx 00000, Attention: Xxxxxxxxx X. Xxxxx, Executive Vice
President and General Counsel, with a copy to Xxxxx, Day, Xxxxxx & Xxxxx, 2300
Xxxxxxxx Xxxx Center, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, Attention: Xxxxxx
X. Xxxxx.
11. Termination.
-----------
This Agreement may be terminated by you by notice to the Company as
follows:
(a) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any Material Adverse Effect or any
development involving a prospective Material Adverse Effect, whether or not
arising in the ordinary course of business, (ii) any outbreak or escalation of
hostilities or declaration of war or national emergency or other national or
international calamity or crisis or change in economic or political conditions
if the effect of such outbreak, escalation, declaration, emergency, calamity,
crisis or change on the financial markets of the United States would, in your
reasonable judgment, make it impracticable to market the Shares or to enforce
contracts for the sale of the Shares, (iii) suspension of trading in securities
generally on the New York Stock Exchange or limitation on prices (other than
limitations on hours or numbers of days of trading) for securities on such
Exchange, (iv) the enactment, publication, decree or other
22
promulgation of any statute, regulation, rule or order of any court or other
governmental authority that in your reasonable opinion materially and adversely
affects or may materially and adversely affect the business or operations of the
Company, (v) declaration of a banking moratorium by United States or New York
State authorities, (vi) the suspension of trading of the Common Stock by the
Commission on the New York Stock Exchange or (vii) the taking of any action by
any governmental body or agency in respect of its monetary or fiscal affairs
that in your reasonable opinion has a material adverse effect on the securities
markets in the United States; or
(b) as provided in Sections 6 and 9 of this Agreement.
12. Successors.
----------
This Agreement has been and is made solely for the benefit of the
Underwriters and the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
13. Miscellaneous.
-------------
The reimbursement, indemnification and contribution agreements contained in
this Agreement and the representations, warranties and covenants in this
Agreement shall remain in full force and effect, regardless of (a) any
investigation made by or on behalf of any Underwriter (or any person controlling
any Underwriter) or the Company (or its directors or officers) or any person
controlling the Company, (b) acceptance of any Shares and payment therefor
hereunder and (c) any termination of this Agreement.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Maryland.
23
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
STERLING COMMERCE, INC.
By:
-----------------------------------------
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
ALEX. XXXXX & SONS INCORPORATED
XXXXXXX, SACHS & CO.
As Representatives of the several
Underwriters listed on Schedule I
By: Alex. Xxxxx & Sons Incorporated
By:
----------------------------------
Authorized Officer
24
EXHIBIT 1(b)
Jurisdiction of
Name Incorporation
---- -------------
Domestic
--------
Sterling Commerce, Inc., a Wyoming Corporation Wyoming
Sterling Commerce (America), Inc. Delaware
Sterling Commerce (Mid America), Inc.* Michigan
Sterling Commerce (Northern America), Inc. Delaware
Sterling Commerce (U.S.), Inc. Delaware
Sterling Commerce International, Inc. Delaware
Sterling Commerce Leasing, Inc. Delaware
International
-------------
Sterling Commerce B.V. Netherlands
Sterling Commerce International SARL France
Sterling Commerce (France), SARL France
Sterling Commerce GmbH Germany
Sterling Commerce (UK), Limited United Kingdom
Sterling Electronic Commerce (Canada), Inc. Canada
Sterling Commerce International Sales Corporation Barbados
----------
* Subsidiary of Sterling Commerce (America), Inc.
25
SCHEDULE I
Schedule of Underwriters
Number of Firm Shares
Underwriters to be Purchased
------------ ---------------------
Alex. Xxxxx & Sons Incorporated
Xxxxxxx, Sachs & Co.
-----------
Total
===========
26
